How does the Inset Boundary option work?
The boundary option on an inset faces operation will only inset new faces where the mesh doesn't have a boundary (where the edges connect 2 or more faces).  Where face edges have only a single edge, no new edges will be created:

Any difference in behavior from toggling &quot;boundary&quot; on the operation depends on whether the edges of the inset face are manifold-- which is not apparent in either of your flat shaded example images.